LANSING, Mich. – The city of Detroit has time to avoid having a state-appointed emergency manager put in place, but city and union officials had better move quickly to avoid significant state intervention, state officials said Tuesday.
A deal between city and union leaders to fix Detroit's finances, if reached by early February, could pre-empt the work of a state-appointed review team that has started digging into the city's finances, Treasurer Andy Dillon said.
"I'm cautiously optimistic," Dillon said after the 10-member review team's first meeting. "I think there's a very good chance that they are able to cut a deal on their own and that this review team's work could be suspended."
The review team appointed by Gov. Rick Snyder is trying to determine if a financial emergency exists in Michigan's largest city. Members include Dillon, former Wayne State University President Irvin Reid, former Michigan Supreme Court Justice Conrad Mallett Jr. and former Detroit police chief Isaiah McKinnon.
The team is expected to report back to Snyder by late February.
The team's appointment came after a recent preliminary review found there was "probable financial stress" in Detroit's city government.
The team met for the first time Tuesday and spoke afterward with media. Eight of the nine members said they believed the city could still avoid having an emergency manager appointed. The only one who did not was Michigan Treasury Department official Frederick Headen, who said he didn't want to prejudge the situation one way or the other before getting all the evidence.
Jack Martin, an accountant named to the review team, participated in the meeting by telephone and wasn't present at the news conference.
The recent preliminary review from the state showed the city faces a nearly $200 million general fund deficit for 2011 and has taken on mounting debt to keep the city afloat.
Auditors had said Detroit could run out of money as early as April, but Detroit Mayor Dave Bing said recently that it won't because of cost-cutting and other measures taking effect.
Longer-term avoidance of a cash crisis likely depends on concessions not yet reached.
Bing's 18-month plan calls for $102 million in savings through June and $258 million over the 2013 fiscal year.
"The mayor has consistently said that we need to get a deal done with the unions by the end of January, which includes concessions and structural changes," Bing chief of staff Kirk Lewis said in a statement Tuesday.
If the state review finds the city is under severe financial stress, city officials still might be able to stave off an emergency manager by adopting and agreeing to strictly follow a consent decree fixing Detroit's finances.
Emergency managers have become more controversial in Michigan because of expanded powers granted in a state law approved last year. The law gave state-appointed managers authority to strip power from locally elected officials and toss out union contracts, prompting lawsuits and petition drives aimed at overturning it.